Leaving UK? (How to become a NON-Resident for TAX Reasons?)
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- Опубликовано: 26 фев 2021
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Lately, I've been talking to a lot of people from the UK who are interested in leaving the country.
This raised an important topic that we already talked about here, which is becoming a non-resident in a country that you want to leave. Today we are talking about how the UK processes individuals who are leaving and becoming non-residents and what should you pay attention to.
There is a very important distinction to understand: Being a non-resident VS Being a resident somewhere else. Just because you became a resident somewhere else doesn't mean that you cease to be a tax resident in your home country.
For example, you might be interested in establishing a residency in UAE. UAE wants you to spend a day in the country every six months in order to keep your residency. However, that doesn't immediately make you a non-resident where you're from. It might be more important from a tax standpoint to become a non-resident of your country than to become a resident somewhere else.
Today we are talking about the UK, which has a very clean and understandable process.
We'll talk about UK Statutory Residency Test and how it works.
There are three sections of this test to pay attention to:
The first one is what we call the Automatic offshore test. If you meet the Automatic offshore test you don't need to go to the next part.
The second is the Automatic Residency test. If you meet all the criteria, you don't need to go to the next part.
The third part is the Sufficient ties test.
If you don't pass any of these statutory residency tests does it mean that you will be a UK tax resident? We are going into detail about everything that you should know.
Link to the UK statutory residence test
www.gov.uk/government/publica...
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You forgot to mention filling out form P85 declaration of non-residency. You have to tell HMRC your intentions.
The important thing is to actually leave. The UK has a HUGE tax treaty network mostly following the OECD model wording. So even if you might become UK tax resident under HMRC rules, as long as you have genuinely left the UK and live in a country covered be a UK tax treaty and not a tax haven (which generally do not have tax treaties) - and this means having a permanent home there, being considered tax resident in your new country (and paying some tax), have your family there (if relevant), children go to school there, have your business outside the UK, have only non-UK bank accounts, foreign driving licence, residence permits, blah blah blah... then you can take advantage of the treaty to say to HMRC "you are quite right, I am tax resident in the UK. But I am also tax resident somewhere else. Oh look...the tax treaty is quite clear... I am tax resident there, not in the UK."
I am fortunate enough to live in Switzerland. There have been years where I have spent substantial number of days returning to the UK (admittedly having hardly step foot there for many years), and have no problems proving my non-UK residence status.
Being a nomad - hopping from one country to another, might be fun. BUT it removes tax treaty protection forcing you to follow the HMRC rules.
Just a thought from someone who has done it. Is still doing it.
Yeah when you're looking over a long period of time this is quite true. In the year of departure it typically isn't so useful both because you can end up with split year status and often you won't have so cleanly left the country in general at the start. But yes I definitely advocate where possible get another tax home elsewhere and tax advantage of the treaty network.
What is the best way possible where you can be non domiciled in the U.K. but spend the most time in the U.K. it would be great to have the option to still spend up to 180 days in the U.K. to see family (without owning home or working etc). I want to go for Portugal golden visa. I have a company I can move abroad but it is so confusing how the tax would work
@@YT-ks9go Significant ties to the UK, by having a rented home and banking operations via UK finance institutions may make you tax resident, according to UK Courts case judgments! Living in Bursa, Turkey, with a Turkish Work Permit and tax residency for more than 184 days per year, by incorporating your own company doing business across borders; and together this is a path to Turkish citizenship; yet the corporate participation exemption for dividends is a sufficient aid for structuring a corporate network (FCC RULES are 10% per cent minimum tax across country borders)! MILITARY service in Turkey may be bought off the conscription requirements! Later operations are the path to Portuguese citizenship! / / \ \ MULTIPLE citizenships are a strong strategy to diversify geographic risks! / / \ \ Keep up the great work!
It is so complicated to understand. There seems to be all these different qualifiers as to what makes you liable, or not.
My situation, I left the U.K. last August to live nomadically. I haven’t spent any time in the U.K. since I left, as I read you must spend less than 16 days within that tax year, or you become liable. I am in the process of selling my only and main U.K. residence/property, which I hope to complete on by October. I’m not working at the moment, so I’m in effect unofficially retired. I am living off a lump sum from my U.K. bank account and using (Transfer) Wise to cut down on fees to access this. I have a portfolio with Interactive Investor which I’m not touching for at least another year before I start to drawdown from this. I thought this would be frozen when I left the U.K., but this isn’t the case, they told me I could still use this. I’ve been dividing my time between Greece and Cyprus. I was in the process of getting residency for Cyprus, but prefer Greece, so now considering getting residency here. Basically, Brexit has made things more tricky with this 90/180 day rule. Basically, I’m wanting to cut ties with the U.K. so I’m not liable for CGT. Any information that’s applicable to my situation you might have would be welcomed. I’ve Googled so much about domicile, residency, split years, tax etc it’s so confusing.
Another great video. Keep it up.
This non-residency is more complicated than one first thinks.
Another great video Michael, thank you.
F
I'm more confused now than I was before watching this
thx In addition to the HMRC residents for the purposes of tax tests there are double taxation treaties which have their own definitions of residence (in my case Portugal). I have been told that the treaty definitions override the HMRC standard definitions. This is logical as the HMRC definitions are written for the intent of people becoming uk tax residents rather than for the benefit of people avoiding uk tax residency. Can you confirm that the double taxation treaties override the HMRC residency guidelines?
If I leave the UK and spend less than the 16 days for the whole tax year but I do private contract work online for a UK company online and get paid into a UK bank account I am still fine right?
WOW! VERY helpful. Many thanks, Michael! -- The only issue is... we cannot legally leave the UK, currently.
You can you just need some "reason" this is easy to create with a letter/email from someone abroad for business
@@MichaelRosmer Worth thinking about.
I have a question...if you live in UK, 365 days per year for example, and own a company in another country and are bringing in income from that country, how would the UK prove that you lived continuously there and weren’t just renting an apartment there and living there part time
To be fair that would not be too difficult. You will have bank accounts, council tax, doctors, where mail is delivered, you car insurance.
The UK government keeps a record of anyone who enters or exits the country. It wouldn't be hard for HMRC to requisition that information from the UK border force
Becoming non resident is easy. Spend less than 16 days in the fiscal year and that's it. But you will be a "temporary" non resident and you will be hit by cgt and a list of other taxes if you become resident again within 5 years. This is an interesting topic and would love to see more content related to this. Great channel! best of luck!
Just to make it clear, if you ARE non-resident in the UK for a fiscal year and then return permanently, what CGT are you liable for? For gains when non-resident?
@@johnporcella2375If you return to the UK before you have been non resident for 5 complete years, you are liable for any CG you realized in your non resident years and all at once. This is a tax anti avoidance rule.
@@javiernelson8809 Lovely. Funny how this anti-avoidance does not affect income tax to pay by the recipient of dividends!
@johnporcella2375 Indeed, because dividends are paid each year and there is no way to delay or time them like we can with capital gains...
@javiernelson8809 Really? As a sole owner-director of a close company, it is possible to declare as much as wanted (within the limits of distributable reserves) and timing for when non-resident!
I'm a British citizen 88 years old,have lived in the Philippines for the last six years Does that that qualify me for any tax refund..I pay approximately 300 pounds tax on my state pension plus my company pension
Great info Michael! This is something I'm just starting to research for myself. As I'm not so keen to renounce British citizenship (unless the Gov here really screws up) then it would be pretty awesome to be a non-tax resident so easily. I want to leave to go live somewhere else but this means I could still visit the UK for up to 90 days to see friends and family. I suppose I could spend 2 months of the summer here and keep another month spare for 'emergency' visits.
Significant ties to the UK, by having a rented home and banking operations via UK finance institutions may make you tax resident, according to UK Courts case judgments! UK HMRC tax authorities, if more than 30 days of work (of more than 3 hours per day) is performed with a British maintained home, may retain UK tax residency?
@@davidmole4851 you wouldn’t keep a rented home in the UK under your personal name, it should be a company. The UK gov website clearly states if you work abroad full time and spend less than 91 days in the UK you are automatically non-resident for tax.
Hi Pete, so great that the UK allows for one to leave the country and become non-resident and still keeps one's passport. Allowing for less than 90 days in the country is also great, intending to do same as u said.
@@lizziedove1364Residency and nationality are surely different@
You may reside outside the UK, but still keep your British citizenship.
90 days per calendar year…
I've been non-resident from UK for more than 40 years. I am a permanent resident of Hongkong and the Phippines. Not a problem.
Are you UK domiciled by origin though? If so, IHT can still be a potential bite
@@silver6054 Let's be real. My boy david aint paying the HMRC no matter what they want 😆
I have not been back to UK for six years, I'm 88 years old..How does that effect my tax , liability and also any increases on my state pension
Split year and CGT? Is there a way around this?
Get out before the split year applies to you?
Hi, I'm interested in Celcius and using crypto collateral to avoid capital gain tax - is this a safe option? Upside vs. downside? Other similar DeFi organisations? I know Celcius is based in the UK. I understand CGT in the US will be 39.6% soon - so might also be interested?
Ok lots of subtle nuances in this question.
First as to what the CGT rate is depends on where you're resident and in some cases how long you've been holding for.
As for pulling out gains by borrowing against the assets using Aave, Celsius, Blockfi, Nexo, etc.
From a tax standpoint yes you can do that without incurring tax. But what about the risk of liquidation? What about locking in gains? What about the costs of interest.
Sometimes it absolutely makes sense but definitely not all the time.
@@MichaelRosmer Seems a risk and need to understand margin calls etc. Thanks! UK is a maximum 20% CGT BUT... our finance minister is reading his budget statement next Weds - we are expecting CGT changes... but who knows? He might say... CGT doubles... in 12 months to get tax now from investors this year when he really needs it. He has been helicoptering money - I keep thinking !920s Germany.
@@tinglestingles yeah this is why lots of people are coming to me regarding leaving UK
Michael Rosmer understood! You deserve the business with your open approach to this information. Very much a different approach to another RUclipsr who seems to be more far more interested in his former country’s politics, sharing his own personal life and selling Cancun conference tickets!
@@tinglestingles lol thanks!
This was helpful however it leaves out any consideration of death duties (Inheritance Tax and Capital Gains Tax) which are a huge burden to an Estate. The only way to avoid this is to demonstrate domicile abroad and to become non-domiciled. Much more compex but possible. Otherwise you estate (in UK or offshore) is liable to IHT and CGT.
The 16 day test is tough for many for non residence. There are simpler ways following the five ties rules.
If I become non-resident in the UK will I lose my state retirement pension and my disability benefit eg; PIP (personal independence payment) ?
Did you get an answer for this?
No answer @@nicholasrondle8439
Great video, might be a bit over complicated. If you leave the U.K. for good, especially at the beginning of tax year, you would be fine. Forget about crap test
Please make a video for spaniards , ZEC is only for some activities, not for cryptotrading. Best place to form an offshore company for spaniards!! Thanks!!
It's about much more than where to form a company there's tons of rules you need to be aware of. I created a video back in 2019 on International tax planning for residents of Spain you can go check out where I go over a bunch of the details.
I'll see what else I can create
But does working abroad mean working abroad for a non UK companiy?
If I am self-employed and living abroad throughout the year and have just been in UK for 30 to 45 days. And I am living in the house that I own in UK. Would I be qualified as a non resident for the tax purpose?
Typically yes. House only matters in UK if you don't meet the automatic overseas test or automatic residency test
Excellent content. Could you do the same one for Canada please?
Sure can do, more complicated in Canada
Canada is vague so they can arbitrarily collect all your money
@@gucciblackbaby5867 could be, I tend to think of it as lazy law making, which you'll see in a lot of parts of the world.
@@MichaelRosmer Nice thanks. Would also like if you can touch on the point of "exit taxes" I think is pretty important for anybody to know about if they decide to move to another country.
@@pures1n UK doesn't have exit taxes, some countries do and it is important but they don't exist in UK
you are canadian right? can you do a similar video for canada?
Good suggestion can do
UK CHARITABLE PHILANTHROPY ALLOWS up to 100% per cent giving for British tax residents to British charity trusts; and this may be accepted by UK HMRC tax authorities, if more than 30 days of work (of more than 3 hours per day) is performed with a British maintained home? Living in Turkey, with a Turkish Work Permit and tax residency for more than 184 days per year, by incorporating my own company doing business across borders; and together this is a path to Turkish citizenship, in addition to my UK passport! Later operations are the path to Portuguese citizenship! / / \ \ MULTIPLE citizenships are a strong strategy to diversify geographic risks! / / \ \ Keep up the great work!
Is it possible to be not tax resident of anywhere?
Depends on your citizenship, if you're a UK citizen then yes
@@OffshoreCitizen how is it possible? I'm a UK citizen
Tax resident in Dubai, non resident (non dom) in 🇬🇧….
Non resident isn't the same as non dom in UK, be careful about the difference
@@OffshoreCitizen I realised my wrong message, my apologies….
this is so baddddd...